Page 11 - Logistics News - May June 2022

T H OU GHT L E A D E R SHIP

the upstream and downstream consequences of a more accurately predict future performance based on
specific disruption, therefore enabling a quick response past performance and the factors currently influencing
to minimise the potential impact. Easy access to it. What-if analysis is a valuable type of predictive
comprehensive data analytics has become critical in an analytics that involves changing various values to see
increasingly competitive landscape. how those changes affect the outcome.
• Prescriptive analytics: This advises teams on what
Demand planning (using historical data and other to do based on predictions. It is the most complex of
factors to predict what customers will order), sales and these analytical techniques, which is why it is used
operations planning (manufacturing and/or purchasing by less than three percent of businesses. This type
the goods required by a business to meet forecasted of analytics could notify a retailer that one of its key
demand) and inventory management (tracking sell- vendors is likely to have difficulty sourcing materials
through of items and which SKUs it needs to replenish) due to political unrest in the region where it currently
are a few examples of supply chain analytics. obtains materials. The retailer could investigate
alternative locations for the material and collaborate
Each of these activities can improve the overall with the vendor to avoid the problem in the first place.
efficiency of business operations, resulting in significant Alternatively, the analytics may reveal that changing
cost savings. For example, more accurate demand vendors or replacing the item with a different product
planning means avoiding procurement overspending is the safest option.
while also avoiding stockouts and excess inventory
(which can turn into obsolete inventory). While the use of AI in prescriptive analytics is
currently making headlines, the reality is that this
There are four primary types of supply chain technology is still in its infancy in terms of producing
analytics that companies should consider right now relevant, actionable insights. The use of AI at scale
to build more efficient operations and save time and necessitates the execution of thousands of queries in
money: search of statistical anomalies. However, randomly
• Descriptive analytics: Companies can use descriptive identified anomalies do not always directly point to
analytics for the supply chain to collect and organise business opportunities. For the time being, human
historical data to get a clear picture of past events. involvement is critical to obtaining relevant insights.
It tracks performance and patterns throughout the
supply chain, from suppliers to logistics to retailers and Today’s supply chain analytics solutions already have
points of sale. For example, a national retailer might impressive capabilities, and as technology advances, they
use an analytics dashboard to track demand for specific will become even more of a game-changer, transforming
SKUs across geographic locations over a period of time. business across all industries. As a result, a supply
• Diagnostic analytics: This is used to identify the chain’s resilience and cost-effectiveness can make or
source of problems and possible solutions to avoid break a business. Supply chain analytics can improve
them in the future. Identifying what happened is your business in both areas, which is why they’re
usually only applicable if the business also knows why becoming more critical for today’s industry leaders.
it happened. As a result, diagnostic analytics is also
known as root cause analysis. However, transformation, like eating a healthy diet,
• Predictive analytics: This assists businesses in takes time and is a proactive journey. Harmonising data
predicting what might happen in the future and analytics can eventually lead businesses to intelligent
determining the likelihood of various outcomes. It supply chain solutions and the ability to compete with L O GI S T I CS NEWS
allows for better planning and goal setting, which industry leaders. So, ask yourself, is your supply chain
results in risk avoidance. It also enables businesses to being fed for success or failure? •

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